OSFI Finalizes Guideline on Large Exposure Limits for D-SIBs in Canada
OSFI released the final version of its Guideline B-2 on large exposure limits for domestic systemically important banks (D-SIBs), with an effective date of November 01, 2019. OSFI also published the guideline impact analysis statement. The Canadian D-SIBs are expected to implement the final version of this guideline in the first quarter of 2020. The consultation on the guideline took place from December 2018 to February 2019. OSFI has issued a summary of comments received and explained how the comments have been addressed in the final guideline.
The new version of Guideline B-2 includes the following:
- Introduces tighter limits for exposures to both global systemically important banks (G-SIBs) and to other Canadian D-SIBs
- Recognizes eligible credit risk mitigation techniques by measuring exposure on a net basis rather than on a gross basis
- Reduces the eligible capital base from total capital to tier 1 capital
The guideline, which was originally issued in 1994, establishes limits for the exposure of a bank to a single counterparty (including connected counterparties), measured as a percentage of capital. In 2014, BCBS published its standard on large exposure risk management. The final guideline of OSFI incorporates the BCBS guidance to reflect current risk management sound practices and provides additional guidance on the methods that OSFI expects D-SIBs to use for identifying, measuring, managing and monitoring large exposures.
Related Links
Effective Date: November 01, 2019
Keywords: Americas, Canada, Banking, Large Exposures, Basel III, D-SIBs, Concentration Risk, Guideline B-2, OSFI
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Patrycja Oleksza
Applies proficiency and knowledge to regulatory capital and reporting analysis and coordinates business and product strategies in the banking technology area
Previous Article
BCBS Issues Basel III Monitoring Updates in August 2019Related Articles
HKMA Sets Out Regulatory Treatment for Personal Loan Guarantee Scheme
HKMA has published a circular that sets out the regulatory and reporting treatment for loans that participating authorized institutions may grant to eligible borrowers under the 100% Personal Loan Guarantee Scheme.
ECB Completes Targeted Review of Internal Models of Banks
ECB published the results of the assessment of internal models that banks use to calculate risk-weighted assets for credit, market, and counterparty credit risks.
PRA on Regulatory Treatment of Loans Under Mortgage Guarantee Scheme
PRA published a statement on the regulatory treatment of retail residential mortgage loans under the Mortgage Guarantee Scheme, or MGS.
FCA Consults on Rules and Reporting Forms for Investment Firms Regime
FCA is consulting, via CP21/7, on the second phase of proposed rules to introduce the UK Investment Firm Prudential Regime (IFPR).
HMT and BoE Decide to Explore Central Bank Digital Currency in UK
HM Treasury and BoE announced the joint creation of a Central Bank Digital Currency (CBDC) Taskforce to coordinate the exploration of a potential central bank digital currency in UK.
EIOPA Sets Out Expectations on Use of Climate Risk Scenarios in ORSA
EIOPA published an opinion to set out its expectations on the supervision of the integration of climate change risk scenarios by insurers in their Own Risk and Solvency Assessment (ORSA).
Bundesbank Updates AnaCredit Reporting Requirements
Bundesbank published two circulars on AnaCredit reporting requirements. Circular 27/2021 covers changes to the reporting of branches, additional attributes to be reported for investment funds from August 01, 2021, and updates to the list of international organizations.
EC Sets Out Standards for MREL Reporting by Competent Authorities
EC published the Implementing Regulation 2021/622 that lays down implementing technical standards for reporting of the minimum requirement for own funds and eligible liabilities (MREL).
BCBS to Advance Work on Suptech, Climate Risk, and Basel Monitoring
BCBS has set out the strategic work priorities, as part of its the work program for 2021-22.
PRA Finalizes Supervisory Approach for Non-Systemic Banks in UK
PRA published the policy statement PS8/21, which contains the final supervisory statement SS3/21 on the PRA approach to supervision of the new and growing non-systemic banks in UK.
